Interim Results

INTERIM RESULTS

'Profit increase of 20%, like for like sales up 7.6%'

Majestic Wine PLC ("Majestic"), the UK's largest wine warehouse chain, today announces its interim results for the 26 weeks ended 27 September 2010.

·; Profit before tax increased by 20.0% to £7.3m (2009: £6.1m).

·; Interim dividend increased 17.9% to 3.3p net per share.

·; Total sales up 10.2% to £117.6m (2009: £106.7m).

·; Like for like sales in UK retail stores up 7.6%.

·; Substantial increase in active customers, up 14.0% to 496,000.

·; Online sales increased 8.3% on last year and now represent 9.1% of UK retail sales.

·; Sales of fine wine continued to increase, with sales of still wine priced at £20 and above increasing by 20.2% on last year.

·; Two new stores in Redhill and Windsor. Since the end of September we have opened in Totnes, Ashbourne, Bracknell, Canterbury, Cobham and a second store in Cardiff.

·; We now operate from 160 stores in the UK and aim to enlarge Majestic to at least 250 locations.

·; Lay & Wheeler, our fine wine specialist, enjoyed considerable success selling en primeur wines from the highly regarded 2009 Bordeaux vintage.

·; Wine and Beer World in France recorded sales growth of 22.9% on constant currency basis.

·; In the six weeks from 28 September to 8 November 2010, like for like sales in our UK stores up 7.4%.

Commenting on the results Steve Lewis, Chief Executive, said:

"I am delighted that Majestic has achieved profit growth of 20.0% in the half year and I am very encouraged that we have been able to attract so many new customers."

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Chairman's Statement

I am delighted that, in my first statement as Chairman, I am able to report that the management team has delivered excellent results. The Group has made strong progress in the first half of the 2010/2011 financial year building on the momentum that we have seen since we reduced our minimum purchase requirement to six bottles in September of last year. Profit before tax was £7.3m, an increase of 20.0% over last year and total revenue grew by 10.2% to £117.6m.

Majestic Wine

Sales at £106.5m were £9.4m higher than in the previous first half year underpinned by like for like sales growth of 7.6%. This is particularly encouraging as it is on top of growth of 7.7% in the comparative period.

We have seen a substantial increase in the number of customers on our database who have shopped in the past year, up 14% to 496,000. The change to a six bottle minimum purchase has been extremely popular with existing customers and has also made Majestic more accessible to new customers. We have seen strong growth in the number of transactions up 18.7% to 869,000, on a like stores basis. We are pleased that the average spend per transaction has only declined by 7.2% to £122 given the halving of our minimum purchase requirement.

Product

We have seen particularly strong growth in sales of wines from New Zealand, France, Italy and Spain. French wine is very important to Majestic and it is pleasing to note that sales have returned to growth driven by the "classic" regions of Bordeaux, Burgundy, Loire and the Rhône. Sales of sparkling wine grew well and we are encouraged that sales of Champagne also increased.

Fine Wine

Sales of still wine priced at £20 per bottle and above increased by 20.2% and now represent 5.0% of UK retail sales. We now have fine wine display areas installed in 96 of our stores and are in the process of rolling these out to all of our locations.

Online Sales

We continue to see good growth in online sales, up 8.3% on last year representing 9.1% of total UK retail sales. Customer behaviour online and expectations of what a website should deliver are constantly evolving. We work hard to entertain and interact with our customers when they visit the website and have substantially improved the content that we publish online. We are particularly proud of our "Grape to Glass" blog which brings our range to life with extended articles written by our staff.

New Stores

We opened two new stores during the period in Redhill and Windsor. Since the end of the period we have opened in Totnes, Ashbourne, Bracknell, Canterbury, Cobham and a second store in Cardiff. We will open in Newmarket later in the year bringing the total number of stores trading in the UK to 161. We are encouraged by the acceleration in the rate of new store openings and envisage being able to expand Majestic to at least 250 locations in the UK.

Awards

We were delighted that at the International Wine Challenge Awards 2010 we were awarded both the "High Street Chain of the Year" and the overall "Merchant of the Year". The judges commented that we had made "real progress" in terms of our range and that "quality had never been better". We were also very pleased that Decanter magazine awarded us "Wine Merchant of the Year" and its readers voted Majestic as "Best Large Merchant" for 2010.

Lay & Wheeler

Lay & Wheeler is a fine wine specialist with particular expertise in the fields of en primeur sales, cellarage and broking of customer reserves. During the period we enjoyed considerable success selling en primeur wines from the highly regarded 2009 Bordeaux vintage. The sales the campaign generated and the costs of the product are not reported in the income statement until the wines are delivered to customers. Conversely, the costs associated with processing these sales have been reported as they have been incurred. In total cumulative profit of £2.2m on revenues of £13.5m has been deferred to future accounting periods, representing the current 2009 Bordeaux and wines from previous campaigns not yet delivered to customers. These sales and profit will be reported in the 2012 and 2013 financial years. 

Profit before interest and tax for the first half, including profit from en primeur sales as orders are received from customers, was £1.4m compared with a loss of £0.1m in the previous year. On a statutory basis profit before interest and tax for the period was £77k, against a loss of £145k recorded last year.

Wine and Beer World (France)

We operate three stores in northern France, two in Calais and one in Cherbourg, catering to UK consumers wishing to take advantage of the much lower rate of alcohol duty in France. The trading environment has become less challenging following the withdrawal of a number of competitors from the marketplace. We strengthened our marketing message in February 2010 by introducing a guarantee that customers will make a saving of at least £2 per bottle on Majestic's UK wine prices. We have been pleased with our customers' response to the guarantee and sales on a constant currency basis grew 22.9% on last year. Profit before interest and tax for the period at £574k was more than three times the £187k achieved last year.

Dividend

We are declaring an increase of 17.9% in our interim dividend to 3.3p net per share. The dividend will be paid on 7 January 2011 to shareholders on the register at the close of business on 10 December 2010.

Future Prospects

In the six weeks from 28 September to 8 November 2010 like for like sales through our UK stores were up 7.4%. This is a very encouraging start to the second half as we have now passed the anniversary of the reduction in our minimum purchase requirement. Although the consumer environment remains challenging we see good potential for the future growth of Majestic. We are well prepared for the important Christmas trading period.

To conclude, I would like to say that I have been very impressed with the enthusiasm and professionalism of the Majestic management team. I would like to thank them and all of their colleagues for their hard work, without which we would not have achieved this very strong performance.

Phil Wrigley

Chairman

15 November 2010

Group Income Statement

For the 26 weeks ended 27 September 2010

Group Statement of Comprehensive Income

For the 26 weeks ended 27 September 2010

Group Statement of Changes in Equity

For the 26 weeks ended 27 September 2010

Group Balance Sheet

As at 27 September 2010

Group Cash Flow Statement

For the 26 weeks ended 27 September 2010

Notes to the Group Interim Financial Statements

1. General Information

Majestic Wine PLC is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 2006 (registration number 2281640). The Company is domiciled in the United Kingdom and its registered address is Majestic House, Otterspool Way, Watford, WD25 8WW. The Company's Ordinary Shares are traded on the Alternative Investment Market ("AIM"). Copies of the Interim Report are being sent to shareholders. Further copies of the Interim Report and Annual Report and Accounts may be obtained from the address above.

The Group's principal activity is the retailing of wines, beers and spirits.

2. Basis of preparationThe interim financial statements of the Group for the 27 weeks ended 27 September 2010, which are unaudited, have been prepared in accordance with the accounting policies set out in the annual report and accounts for the 52 weeks ended 29 March 2010, except that the Group has adopted the following revised IFRS during the period.

IFRS 2 Share-based Payment - Group Cash-settled Share-based Payment Transactions

This standard has been amended and it clarifies the accounting for group cash-settled share-based payment transactions. The amendment supersedes IFRIC 8 and IFRIC 11. The adoption of this amendment did not have any impact on the financial position of the Group.

The financial information contained in the interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the full preceding year is based on the statutory accounts for the 52 weeks ended 29 March 2010. The report of the auditors, Ernst & Young LLP, on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. These accounts have been delivered to the Registrar of Companies.

As permitted, this interim report has been prepared in accordance with UK listing rules and not in accordance with IAS 34 "Interim Financial Reporting" - therefore it is not fully in compliance with IFRS.

The interim financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

3. Segment reporting

The Group's operations are organised into three distinct business units each operating in a separate segment of the overall wine market. Majestic Wine Warehouses is a UK based wine retailer, Lay & Wheeler is a specialist in the fine wine market and Wine and Beer World operated retail units in northern France servicing the UK cross-channel market.

No operating segments have been aggregated to form the above reportable segments. Management monitors the operating results of the businesses separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated on both sales growth and profit before interest.In the information provided to the chief operating decision maker, the underlying performance of the Lay & Wheeler operating segment is evaluated and measured based on revenue and profit being recognised on orders, cash receipts and payments from en primeur campaigns. Management reviews the business on this alternative basis as resources utilised in generating these sales are expensed as incurred. This differs from the revenue recognition policy required under IAS 18 where revenue is recognised on delivery which may be up to two years later. As a result a reconciling item is presented between the total operating segments revenue and results and the IFRS statutory measure. Comparative information has been restated to reflect this change in the basis of measurement. This restatement has had no impact on reported revenue and profit in the current or comparative periods.

Financing including associated revenues and costs and taxation are managed at a Group level and are not allocated to operating segments. Inter-segment transactions are conducted on an arm's length basis in a manner similar to transactions with third parties.

4. Taxation

Taxation for the 26 weeks to 27 September 2010 has been calculated by applying the estimated tax rate for the current financial year ending 29 March 2010, except that deferred tax assets relating to share based payments have been recalculated to reflect an increase in the share price. In addition deferred tax balances have been recalculated to reflect the reduction in the rate of corporation tax to 27% from 28% that is effective from April 2011.

5. Earnings per share

Basic earnings per share is calculated on profit for the period attributable to equity shareholders of £5,099,000 (2009: £4,323,000) apportioned over the weighted average number of Ordinary Shares that were in issue for the period: 61,600,035 (2009: 61,431,568). The calculation of diluted earnings per share is in accordance with IAS 33 - Earnings Per Share. The weighted average number of Ordinary Shares in issue has been adjusted to take account of the effect of all dilutive potential Ordinary Shares. The number of shares used in the calculation was 62,487,027 (2009: 61,565,798).

6. Dividend

A dividend of 7.5p net per share was paid to shareholders on 13 August 2010. An interim dividend of 3.3p per share will be paid on 7 January 2011 to shareholders on the register at the close of business on 10 December 2010.

7. En Primeur

En primeur refers to the process of purchasing wines early before they are bottled and released onto the market. This method of purchasing gives the consumer the opportunity to secure wines that may be in limited quantity and very difficult to acquire after release. Receipts and payments for these wines may be up to two years before the wines are delivered to customers. Payments to suppliers are treated as trade receivables and receipts from customers treated as deferred income until the wines are delivered.

In the prior periods, balances related to en primeur purchases and deferred income, have been reported in current assets and liabilities as part of trade receivables and payables. In order to provide users of the financial statements with more detailed and comparable information, management have reclassified en primeur balances to separate lines in the face of the balance sheet. In performing this exercise management have also reviewed the ageing profile of the balances and have re-stated the comparative balance sheets accordingly.

a) Analysis of en primeur balances

b) Movement in en primeur balances

8. Note to the cash flow statement

Reconciliation of profit to cash generated by operations

9. Net debt

a) Analysis of net debt

b) Reconciliation of net cash flow to movement in net debt